Office Sector News
New Office Tower Proposed On East Market
Developer Oliver Tyrone Pulver Corporation of West Conshohocken has proposed an 840,000-square-foot office tower with retail space, to be designed by Skidmore, Owings & Merrill and built on the northwest corner of 13th and Market Streets, The Philadelphia Inquirer reported on December 19. The project would be the first in Center City since the 1980s for the developer.
The site of the new building, to be named 1301 Market Street, belongs to the estate of Samuel Rappaport and currently is a surface parking lot. The developer has it under agreement of sale and is expected to secure a lead tenant before any substantive work begins.
To read the article, please go to bit.ly/2h6zsNm.
City Leads Suburbs in Occupancy Rates, Average Rents
JLL counts 44,708,491 sf of office space in the CBD, 152,448 sf filled in the fourth quarter for a total of 206,698 sf for the year, and an 89.8% occupancy rate, with average asking rent of $30.24.
Philadelphia suburbs have 53,001,999 sf, gained 102,853 sf during the quarter and added a total of 411,717 sf for the year, with an occupancy rate of 85.9% and average asking rent of $25.87.
Between 2015 and 2016, approximately 1.1 million square feet (or 21%) of all deals in the CBD and University City came from the suburbs or out of market. If this level of inbound tenant attraction continues or accelerates, the market would have the capacity to absorb existing and proposed blocks, the report notes.
To read the JLL report, please go to bit.ly/2iMi5Aq [PDF].
Insurance Broker Expands to Downtown
Lockton, a privately held insurance broker, announced on January 4 that it has opened an office at 1800 John F. Kennedy Boulevard to supplement its office in Blue Bell, opened five years ago.
Lockton is planning to expand operations within the greater Philadelphia metro area. To read the press release, please go to prn.to/2iB9liC.
Guide to Coworking Spaces
Technical.ly Philly on January 5 published a comprehensive guide to the more than 30 varied and current coworking office spaces in the Philadelphia area, including seven that are in Center City and others nearby in Old City, University City, Bella Vista and East Passyunk.
The guide details size, amenities, pricing and anchor tenants, and notes some spaces that have closed.
To read the article, please go to bit.ly/2hUXF6x.
Progress on Major Construction of the Viaduct Rail Park, Phase 1
Last week, AP Construction’s team began removing the hardened earth on the Viaduct’s deck pans, which serve as a stable base for the former rail tracks where they crossed 12th and Callowhill Streets.
The earthen fill being removed is about 18 inches deep and will be replaced with concrete to prevent leaking into the underpasses by creating an impervious sub-base of support for the new $10.3 million park.
The CCD is extremely grateful for all the support provided for this project. For more information and to see a list of major donors, please go to centercityphila.org/about/viaduct.php.
The Center City District Foundation (CCDF) is continuing fundraising efforts during construction to fill a remaining $700,000 gap. For donations, gifts and naming opportunities, please go to supportccdf.org/viaductrailpark.
Residential Market News
City’s House Prices Outpace the Suburbs’
The typical suburban home in the Philadelphia region declined in price by 1.0% in the third quarter, while the typical city home increased by 1.4% during the same period, according to Kevin C. Gillen, Senior Research Fellow with the Lindy Institute for Urban Innovation at Drexel University, in a new report, Philadelphia Regional Housing Report: Q3 2016, released on December 23.
From the second to third quarter, the median house price in Philadelphia increased from $145,000 to $149,000, while the median suburban house price declined from $229,850 to $227,565. Citywide house prices are now 10% higher than their previous peak in mid-2007 while suburban house prices remain 15% below their previous peak at that time. The spread between average citywide and suburban house prices is now at an all-time high.
To read the report, please go to bit.ly/1qntloS.
Hotel RevPAR Rises in Third Quarter
The U.S. hotel industry experienced a year-over-year RevPAR gain of 3.3% in the third quarter of 2016 and a 3.4% year-over-year increase in Average Daily Rate (ADR), according to CBRE’s Hotel Marketview – Third Quarter Edition, 2016. Demand grew by 1.6% year over year in the quarter, down from 2.1% growth in the previous quarter, the 27th consecutive quarter of positive demand gains, a streak expected to continue well into 2018.
The year-over-year increase in the number of available rooms was steady at 1.6% between the second and third quarters, while the number of rooms under construction expanded to more than 183,000 units, with another 192,000 expected within 12 months.
Hotel investment accelerated in the quarter to $7.6 billion, a year-over-year gain of 2.4%, although year-to-date investment is 41.2% below the same period in 2015.
To read the report, please go to researchgateway.cbre.com.
PHLCVB Adds Travel Office in Copenhagen
The Philadelphia Convention & Visitors Bureau (PHLCVB) has established a new tourism office in Copenhagen to foster more travel between the two cities, the Copenhagen Post reported on January 6.
PHLCVB is predicting a 21% increase in travel from Scandinavia in the next three years, the article noted. The new office is part of an ongoing effort to promote international tourism in Philadelphia.
To read the article, please go to bit.ly/2jcG3ny.
Eds and Meds News
DNC Host Committee Donates to School Book Fund
The Host Committee for the 2016 Democratic National Convention (DNC) is donating $750,000 to the Right Books Campaign, part of a larger initiative by the Philadelphia School District to improve literacy in early school grades by placing 800,000 books in classroom libraries, The Philadelphia Inquirer reported on December 19. The DNC money had been held in escrow to secure a line of credit for the Committee.
The District has committed $20 million over three years, and the Lenfest Foundation and William Penn Foundation have pledged $10 million over the same time.
To read the article, please go to bit.ly/2i6OMY4.
Retail Sales Growing in Philadelphia Area
In the Philadelphia Metropolitan Statistical Area, retail sales continued to grow, reaching $108.1 billion in the third quarter of 2016, a 0.6% increase over the second quarter, led by sales in book stores, office supply shops and shoe stores, with sales down in jewelry and department stores, according to CBRE’s Marketview, Greater Philadelphia Retail, Q4 2016. The fourth quarter is expected to see sales of about $109 billion, a 3.3% increase year over year.
After 1.3 million square feet of new retail space was delivered into the Greater Philadelphia region in the third quarter, another seven retail projects were completed in the fourth, including Rodin Square in downtown Philadelphia, the report noted. The drivers that fueled growing retail sales, higher employment and incomes, are expected to continue in 2017.
To read the report, please go to researchgateway.cbre.com (requires registration).
Arts and Culture News
Seaport Museum Awarded $1.2 Million Grant
The Independence Seaport Museum announced on January 4 that it has been awarded a $1.2 million grant from the William Penn Foundation for the next phase of planning for River Alive!, a new interactive exhibition showcasing the science, ecology and stewardship of the Delaware River watershed. The grant will also support upgrades and expansion of the Museum’s docks at the northern end of the Penn’s Landing Marina.
The museum also is managing a second grant from the William Penn Foundation on behalf of a group of 23 environmental education centers to develop shared programs and coordinated messaging about the importance of clean water.
To read an article about the grant, published in the Philadelphia Business Journal, please go to bit.ly/2iJ4ooE.
Parks and Open Space News
Series of Horticultural Programs at Dilworth Park
Throughout January and February, Greater Philadelphia Gardens, which partnered with the CCD to create the America’s Garden Capital Maze on the south side of Dilworth Park, will present free horticultural programs for both families and adults. Programs will be held in the Rothman Institute Cabin on the north side of the park and are made possible by generous funding from the William Penn Foundation. Whether you have a large backyard, a small roof deck, or a sunny apartment window, you will enjoy these programs:
Tree Care for the Homeowner, January 10, Noon – 1 p.m. (Adults)
Winter Plants for Home, January 21, 10 a.m. – 11 a.m. (Family)
Terrarium How To, January 24, Noon – 1 p.m. (Adults); January 28,
10 a.m. – 11 a.m. (Family)
Orchids for the Office, January 31, Noon – 1 p.m. (Adults)
Seed Bombs for Valentine’s Day, February 4, 10 a.m. – 11 a.m. (Family);
February 7, Noon – 1 p.m. (Adults)
Valentine’s Day Floral Arrangement, February 11, 10 a.m. – 11 a.m. (Family); February 14, Noon – 1 p.m. (Adults)
Flowers to Wear, February 18, 10 a.m. – 11 a.m. (Family)
Seed Starting, February 21, Noon – 1 p.m. (Adults); February 25,
10 a.m. – 11 a.m. (Family)
For up-to-date schedule and information on all activities at Dilworth Park, please visit dilworthpark.org.
SEPTA Seeks Input on 2018 Capital Budget
On January 24, from Noon to 2:00 p.m. and again from 4:30 p.m. to 6:00 p.m., in the SEPTA Board Room, 1234 Market Street, SEPTA will host an Open House on the development of the Fiscal Year 2018 Capital Budget and 12-Year Capital Program. Staff will provide an update on progress made on capital projects. All are invited to attend and provide input on the capital program.
If you cannot attend, but wish to submit comments in writing, please send them to: SEPTA’s Capital Budget and Grant Development Department, 1234 Market Street, 9th Floor, Philadelphia, PA 19107, or to email comments, please go to bit.ly/2jaMc7I.
Public hearings on the Fiscal Year 2018 Capital Budget and 12-Year Capital Program will be scheduled in April 2017.
Night Closures of I-676 for Bridge Construction
I-676 will be closed and detoured in both directions between the I-76 and Broad Street (Route 611) interchanges today, January 9, through Thursday, January 12, from 11:00 p.m. to 5:00 a.m. the following morning for overhead bridge construction, PennDOT announced on January 4.
The overnight operation is part of the four-year, $64.8 million project to replace seven structurally deficient bridges over I-676 between 22nd Street and 18th Street and to make landscaping and streetscape improvements above the expressway. Construction began in April 2015 and will finish in November 2018, a year ahead of schedule. The work schedule is weather dependent.
For more information on the I-676 project, please go to bridgesover676.com. For detours and other information, please go to 511PA.com.
Service Industry Robust in December
The regional service industry expanded substantially in December, according to firms responding to the Federal Reserve Bank of Philadelphia’s Nonmanufacturing Business Outlook Survey for the month, with new orders up for 41.0%, down for 19.4%, and remaining the same for 21.3%.
The number of full-time employees rose for 24.5% of the respondents, fell for only 4.8%, and continued unchanged for 60.7%.
Looking six months ahead, 70.7% of the companies expected business to improve, while 3.4% anticipated a downturn, and 15.2% foresaw no change.
To read the report, released on December 20, please go to bit.ly/2iEPFst.
Craig Ey on Job Growth: ‘Alarm Bells Should Be Ringing’
In a recent column on the City’s regulatory environment, Craig Ey, Editor-in-Chief of the Philadelphia Business Journal, quoting research and reports by the Center City District/Central Philadelphia Development Corporation, notes that while private-sector jobs in the country’s 25 most populous cities grew at 2.7%, Philadelphia has lagged at 0.9% per year, and job growth since 2010 has trailed all East Coast competitors — Washington, New York, Boston and Baltimore.
“Alarm bells should be ringing across media, government and citizen groups,” Ey noted about the need for a greater focus on job growth. To read the article, please go to bit.ly/2iL1xLr (subscription needed).
Courts Dealing With Soda Tax
Philadelphia Common Pleas Court Judge Gary S. Glazer on December 19 dismissed the lawsuit challenging the legality of Philadelphia’s new soda tax brought by the Philadelphians Against Grocery Tax Coalition, The Philadelphia Inquirer reported. The Coalition appealed to Commonwealth Court.
The tax, expected to generate about $92 million a year, was implemented on January 1 and adds 1.5 cents per ounce to the cost of most sugary and diet beverages, applied at the distributor level. The first tax bill is due February 20, bit.ly/2gUo9Ev.
On January 5, City attorneys asked the Pennsylvania Supreme Court to rule on the tax and bypass the Commonwealth Court, The Philadelphia Inquirer reported. The Kenney administration wants an accelerated decision from the Supreme Court in order to make decisions on programs the tax will fund such as expansion of pre-K and renovations of parks, recreation centers and libraries, bit.ly/2i0xkav.
Cigarette Tax Revenue Projection Lowered
Tax revenues from Philadelphia’s $2-per-pack cigarette tax for fiscal year 2016-2017 (FY17) now are projected to be approximately $49.6 million, instead of the $75 million initially predicted, The Philadelphia Inquirer reported on January 4, based on a report issued by the Office of the City Controller.
The tax was implemented in 2014 to aid the Philadelphia School District, which was expecting to receive about $54 million this fiscal year, the article noted. The shortfall is not expected to put the District at risk, however, because the state is obligated to make up the difference if the local revenues do not reach $58 million. The state increased its tax on cigarettes by $1 in August, bringing the total tax on a pack of 20 cigarettes to $4.60.
To read The Philadelphia Inquirer article, please go to bit.ly/2hZC3G4. To read the City Controller’s report, please go to bit.ly/2i1t7Dc [PDF].
PICA: Overtime Fueled Increase in City Spending
The first quarter of FY17 shows a City of Philadelphia General Fund year-end balance projected at $95.8 million, $55.5 million higher than the initial FY17-21 Five-Year Financial Plan estimate, according to the Staff Report on City’s First Quarter City Manager’s Report, produced by the Pennsylvania Intergovernmental Cooperation Authority (PICA) and released on January 4.
The report also shows General Fund revenue projected at $4.2 billion, an increase of $19.5 million from the initial Plan estimate, reflecting higher than projected tax revenue of $17.7 million. However, General Fund obligations were higher than projected, $4.2 billion, an increase of $37 million from the Plan estimate, and attributable to higher overtime costs, which accounted for 14.5% of total wages and salaries, the highest percentage since FY10, and which coincided with the city's hosting of the Democratic National Convention.
To read the report, please go to bit.ly/2ilakAF [PDF].
State Task Force to Address Property Tax Reassessment Practices
Pennsylvania has become known for having the least regulated and most antiquated property assessment system in the country, an issue that will be taken up by the state’s Reassessment Reform Task Force, scheduled to meet on January 26, WHYY’s Keystone Crossroads reported on January 3.
Among the ideas to be discussed are developing a trigger for reassessments based on the value of the tax base's property assessments and their variation from market values, and splitting the bill for reassessments among counties, municipalities and school districts that depend on property values for revenue.
To read the article, please go to bit.ly/2iNhXRq.
Elected Representatives Return in Late January
Philadelphia City Council will hold its first meeting of the year on Thursday, January 26, at 10:00 a.m.
Both branches of the Pennsylvania General Assembly, the House and the Senate, will reconvene on Monday, January 23, at 1:00 p.m.
Center City District Restaurant Week Begins January 22
Center City District Restaurant Week presented by TD Bank, Open Table and Cardiology Consultants of Philadelphia, will take place Sunday, January 22 – Friday, January 27, and Sunday, January 29 – Friday, February 3, and will offer a variety of dining options in more than 120 participating restaurants.
Restaurants will offer three-course dinners for $35, with some restaurants featuring a three-course lunch for $20, not including tax, gratuity, or alcohol. Restaurants will feature signature cocktails from partners Basil Hayden and Jim Beam Double Oak.
Reduced parking rates for guests of Center City District Restaurant Week are available at various Philadelphia parking facilities through a partnership with the Philadelphia Parking Authority. A full list and map are available at bit.ly/2hOCqn6.
For a complete list of participating restaurants, please go to bit.ly/1eofALq. Also, use m.CenterCityPhila.org to search for participating restaurants, check menus and make reservations on your phone. Keep up with the latest Restaurant Week news on Twitter @PhilaRestWeek. For complete information, please visit centercityphila.org/RestaurantWeek.